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Winmark Corporation Announces Year End Results

Winmark Corporation (Nasdaq: WINA) announced today net income for the year ended December 25, 2021 of $39,919,900 or $10.48 per share diluted compared to net income of $29,823,300 or $7.72 per share diluted in 2020. The fourth quarter 2021 net income was $11,589,000 or $3.09 per share diluted, compared to net income of $8,092,300 or $2.09 per share diluted, for the same period last year. Revenues for the year ended December 25, 2021 were $78,216,200 up from $66,061,800 in 2020.

“Our 2021 financial results were exceptional. This is a testament to the hard work of our franchise partners, the strength of our sustainable business model as well as the incredible efforts of our employees,” stated Brett D. Heffes, Chairman and Chief Executive Officer. “The strategic decision to finalize plans for shedding all non-core activities was a key moment in our history. We believe that our focus on the large and growing resale market will benefit all Winmark stakeholders.”

Winmark – the Resale Company®, is a nationally recognized franchising business focused on sustainability and small-business formation. We champion and guide entrepreneurs interested in operating one of our award winning resale franchises: Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. At December 25, 2021, there were 1,271 franchises in operation and over 2,800 available territories. An additional 46 franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

WINMARK CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

December 25,

2021

 

December 26,

2020

ASSETS

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,407,000

 

 

$

6,659,000

 

Restricted cash

 

 

30,000

 

 

 

25,000

 

Receivables, net

 

 

1,103,400

 

 

 

1,581,900

 

Net investment in leases - current

 

 

2,890,600

 

 

 

8,687,500

 

Income tax receivable

 

 

667,500

 

 

 

221,200

 

Inventories

 

 

325,200

 

 

 

106,600

 

Prepaid expenses

 

 

1,008,600

 

 

 

995,200

 

Total current assets

 

 

17,432,300

 

 

 

18,276,400

 

 

 

 

 

 

 

 

Net investment in leases – long-term

 

 

229,300

 

 

 

4,573,600

 

Property and equipment, net

 

 

1,976,900

 

 

 

2,332,800

 

Operating lease right of use asset

 

 

2,982,000

 

 

 

3,226,300

 

Goodwill

 

 

607,500

 

 

 

607,500

 

Other assets

 

 

418,300

 

 

 

435,900

 

Deferred income taxes

 

 

3,252,700

 

 

 

1,890,700

 

 

 

$

26,899,000

 

 

$

31,343,200

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

 

 

 

 

 

 

Notes payable, net

 

$

4,232,600

 

 

$

4,236,100

 

Accounts payable

 

 

2,099,000

 

 

 

1,769,600

 

Accrued liabilities

 

 

2,001,000

 

 

 

2,624,000

 

Discounted lease rentals

 

 

 

 

 

1,096,600

 

Deferred revenue

 

 

1,645,000

 

 

 

1,657,400

 

Total current liabilities

 

 

9,977,600

 

 

 

11,383,700

 

Long-Term Liabilities:

 

 

 

 

 

 

Notes payable, net

 

 

43,376,400

 

 

 

17,632,700

 

Discounted lease rentals

 

 

 

 

 

574,000

 

Deferred revenue

 

 

6,863,500

 

 

 

7,050,900

 

Operating lease liabilities

 

 

4,810,100

 

 

 

5,307,400

 

Other liabilities

 

 

954,800

 

 

 

773,200

 

Total long-term liabilities

 

 

56,004,800

 

 

 

31,338,200

 

Shareholders’ Equity (Deficit):

 

 

 

 

 

 

Common stock, no par, 10,000,000 shares authorized,

3,635,806 and 3,756,028 shares issued and outstanding

 

 

 

 

 

9,281,800

 

Retained earnings (accumulated deficit)

 

 

(39,083,400

)

 

 

(20,660,500

)

Total shareholders’ equity (deficit)

 

 

(39,083,400

)

 

 

(11,378,700

)

 

 

$

26,899,000

 

 

$

31,343,200

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Fiscal Year Ended

 

 

December 25,

2021

 

December 26,

2020

 

December 25,

2021

 

December 26,

2020

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

15,638,100

 

 

$

13,097,900

 

 

$

60,779,300

 

 

$

46,286,200

 

Leasing income

 

 

2,796,500

 

 

 

2,443,200

 

 

 

11,148,300

 

 

 

14,484,000

 

Merchandise sales

 

 

1,119,800

 

 

 

468,600

 

 

 

3,100,100

 

 

 

2,215,400

 

Franchise fees

 

 

395,600

 

 

 

379,600

 

 

 

1,496,900

 

 

 

1,444,500

 

Other

 

 

424,300

 

 

 

406,000

 

 

 

1,691,600

 

 

 

1,631,700

 

Total revenue

 

 

20,374,300

 

 

 

16,795,300

 

 

 

78,216,200

 

 

 

66,061,800

 

Cost of merchandise sold

 

 

1,052,800

 

 

 

441,900

 

 

 

2,940,500

 

 

 

2,103,900

 

Leasing expense

 

 

439,500

 

 

 

178,900

 

 

 

1,850,300

 

 

 

2,622,600

 

Provision for credit losses

 

 

(39,300

)

 

 

(243,600

)

 

 

(206,600

)

 

 

(79,300

)

Selling, general and administrative expenses

 

 

6,008,200

 

 

 

5,484,000

 

 

 

22,295,800

 

 

 

21,203,100

 

Income from operations

 

 

12,913,100

 

 

 

10,934,100

 

 

 

51,336,200

 

 

 

40,211,500

 

Interest expense

 

 

(508,300

)

 

 

(327,900

)

 

 

(1,453,900

)

 

 

(1,737,500

)

Interest and other income (expense)

 

 

(7,900

)

 

 

15,700

 

 

 

(15,000

)

 

 

43,400

 

Income before income taxes

 

 

12,396,900

 

 

 

10,621,900

 

 

 

49,867,300

 

 

 

38,517,400

 

Provision for income taxes

 

 

(807,900

)

 

 

(2,529,600

)

 

 

(9,947,400

)

 

 

(8,694,100

)

Net income

 

$

11,589,000

 

 

$

8,092,300

 

 

$

39,919,900

 

 

$

29,823,300

 

Earnings per share - basic

 

$

3.20

 

 

$

2.16

 

 

$

10.87

 

 

$

8.02

 

Earnings per share - diluted

 

$

3.09

 

 

$

2.09

 

 

$

10.48

 

 

$

7.72

 

Weighted average shares outstanding - basic

 

 

3,622,690

 

 

 

3,747,604

 

 

 

3,671,980

 

 

 

3,719,485

 

Weighted average shares outstanding - diluted

 

 

3,753,982

 

 

 

3,879,796

 

 

 

3,810,480

 

 

 

3,863,264

 

WINMARK CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

December 25,

2021

 

December 26,

2020

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

39,919,900

 

 

$

29,823,300

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

430,600

 

 

 

484,700

 

Provision for credit losses

 

 

(206,600

)

 

 

(79,300

)

Compensation expense related to stock options

 

 

1,435,500

 

 

 

1,315,200

 

Deferred income taxes

 

 

(1,362,000

)

 

 

(1,223,700

)

Loss from disposal of property and equipment

 

 

 

 

 

200

 

Deferred initial direct costs

 

 

(2,100

)

 

 

(18,300

)

Amortization of deferred initial direct costs

 

 

18,900

 

 

 

105,900

 

Operating lease right of use asset amortization

 

 

244,300

 

 

 

368,900

 

Tax benefits on exercised stock options

 

 

2,479,600

 

 

 

872,900

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

478,500

 

 

 

87,600

 

Principal collections on lease receivables

 

 

9,915,400

 

 

 

14,829,200

 

Income tax receivable/payable

 

 

(2,925,900

)

 

 

(596,200

)

Inventories

 

 

(218,600

)

 

 

(20,600

)

Prepaid expenses

 

 

(13,400

)

 

 

(27,100

)

Other assets

 

 

17,600

 

 

 

56,600

 

Accounts payable

 

 

329,400

 

 

 

754,600

 

Accrued and other liabilities

 

 

(948,500

)

 

 

(691,400

)

Rents received in advance and security deposits

 

 

(1,046,600

)

 

 

(1,954,000

)

Deferred revenue

 

 

(199,800

)

 

 

(867,200

)

Net cash provided by operating activities

 

 

48,346,200

 

 

 

43,221,300

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(74,700

)

 

 

(45,100

)

Purchase of equipment for lease contracts

 

 

(208,400

)

 

 

(4,114,000

)

Net cash used for investing activities

 

 

(283,100

)

 

 

(4,159,100

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from borrowings on line of credit

 

 

 

 

 

46,600,000

 

Payments on line of credit

 

 

 

 

 

(46,600,000

)

Proceeds from borrowings on notes payable

 

 

30,000,000

 

 

 

 

Payments on notes payable

 

 

(4,250,000

)

 

 

(3,750,000

)

Repurchases of common stock

 

 

(44,217,500

)

 

 

(48,987,500

)

Proceeds from exercises of stock options

 

 

8,320,000

 

 

 

8,252,800

 

Dividends paid

 

 

(33,162,600

)

 

 

(14,230,800

)

Proceeds from discounted lease rentals

 

 

 

 

 

1,157,000

 

Net cash used for financing activities

 

 

(43,310,100

)

 

 

(57,558,500

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

4,753,000

 

 

 

(18,496,300

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

6,684,000

 

 

 

25,180,300

 

Cash, cash equivalents and restricted cash, end of period

 

$

11,437,000

 

 

$

6,684,000

 

SUPPLEMENTAL DISCLOSURES:

 

 

 

 

 

 

Cash paid for interest

 

$

1,388,900

 

 

$

1,738,400

 

Cash paid for income taxes

 

$

11,555,100

 

 

$

9,552,500

 

 

 

 

 

 

 

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Balance Sheets to the total of the same amounts shown above:

 

 

Fiscal Year Ended

 

 

December 25,

2021

 

December 26,

2020

Cash and cash equivalents

 

$

11,407,000

 

 

$

6,659,000

 

Restricted cash

 

 

30,000

 

 

 

25,000

 

Total cash, cash equivalents and restricted cash

 

$

11,437,000

 

 

$

6,684,000

 

 

Contacts

Brett D. Heffes

763/520-8500

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